Denbury Resources Offers Proved Reserves, Production Results

Denbury Resources Inc.

("Denbury" or the "Company") today announced that its total estimated proved oil and natural gas reserves at December 31, 2012 were 409 million barrels of oil equivalent ("MMBOE"), consisting of 329 million barrels of crude oil, condensate and natural gas liquids, and 482 billion cubic feet (80 MMBOE) of natural gas. Reserves were 80% liquids and 60% proved developed, and 49% of such reserves were attributable to Denbury's carbon dioxide enhanced oil recovery ("CO[2] EOR" or "tertiary") operations. Nearly all of Denbury's reserves not attributable to CO[2] EOR operations at year-end 2012 relate to planned future CO[2] EOR operations. Also, year-end 2012 proved reserve estimates do not include the estimated 42 MMBOE of proved reserves associated with Denbury's pending acquisition of property interests in the Cedar Creek Anticline of Montana and North Dakota from ConocoPhillips in a transaction expected to close near the end of the first quarter of 2013 (the "CCA Acquisition").     Denbury's aggregate proved reserve additions during 2012 were 114 MMBOE, primarily consisting of 57 MMBOE from CO[2] EOR operations at Hastings and Oyster Bayou fields, 26 MMBOE from the acquisition of interests in the Thompson, Webster, and Hartzog Draw fields that Denbury plans to flood with CO[2] in the future, and additions of 11 MMBOE in the Bakken area prior to its sale in the fourth quarter of 2012. These 2012 additions were offset by 26 MMBOE of production, the sale during the year of properties with combined proved reserves of 124 MMBOE, and minor revisions, including those related to lower natural gas prices. Total tertiary oil reserves at December 31, 2012 were 201 MMBOE, up 36% from the prior year-end level of 148 MMBOE, primarily as a result of initial bookings at Hastings and Oyster Bayou fields.       The estimated discounted net present value of Denbury's proved reserves at December 31, 2012, before projected income taxes, using a 10% per annum discount rate ("PV-10 Value", a non-GAAP measure), was $9.9 billion, using first-day-of-the-month 12-month average 2012 prices of $94.71 per barrel ("Bbl") for oil and $2.85 per million British thermal unit ("MMBtu") for natural gas. This represents a $0.7 billion decline from the prior year level as the strategic sale of properties with a PV-10 Value of $1.9 billion at year-end 2011 (using first-day-of-the-month 12-month average 2011 prices of $96.19 per Bbl for oil and $4.16 per MMBtu for natural gas) and the impact of lower oil and natural gas prices more than offset increases from additional tertiary reserves and acquired properties. The year-end 2012 PV-10 Value of proved reserves attributable to Denbury's tertiary oil activities was $6.8 billion, a $1.1 billion, or 19%, increase from the prior year level.  Also, year-end 2012 PV-10 Values do not include any PV-10 Value of the pending CCA Acquisition, which is currently estimated at $1.1 billion using the same commodity price assumptions as those in Denbury's year-end 2012 report. On a pro forma basis, it is currently estimated that the CCA Acquisition would increase the Company's PV-10 Value to approximately $11 billion. Following is a preliminary reconciliation of the change in the Company's proved oil and natural gas reserve quantities between December 31, 2011 and December 31, 2012, along with the pro forma impact of the pending CCA Acquisition:   MMBOE Balance at December 31, 2011 462 Extensions & discoveries and improved recoveries 86 Acquisitions  28 Sales (124) Estimated revisions due to price changes (7) Other estimated revisions (10) Estimated 2012 production (26) Balance at December 31, 2012  409 Estimated reserves from pending CCA Acquisition  42 Estimated pro forma reserves 451 Denbury's estimated proved CO[2] reserves at year end 2012, increased 8% to 9.6 trillion cubic feet ("Tcf"). CO[2] reserves are presented on a gross working interest or 8/8^ths basis, except those reserves recently acquired from ExxonMobil which are reported net to Denbury's interest. Of these total CO[2] reserves, 6.1 Tcf were in the Gulf Coast region and 3.5 Tcf were in the Rocky Mountain region. Denbury's acquisition of approximately one-third of ExxonMobil's CO[2] reserves in LaBarge Field in Wyoming added approximately 1.3 Tcf to its Rocky Mountain region CO[2] reserves. Preliminary 2012 and Fourth Quarter Production Based on preliminary data, Denbury's average annual production rate for 2012 was 71,689 barrels of oil equivalent per day ("BOE/d") which included 35,206 barrels per day ("Bbls/d") from tertiary properties and 14,847 BOE/d from properties sold in 2012. Preliminary estimated total fourth quarter 2012 production was 70,116 BOE/d which included 37,550 Bbls/d from tertiary properties and 10,064 BOE/d from the Bakken area assets the Company sold during such quarter.  Quarterly total continuing production, which excludes production from the Bakken area assets sold during the fourth quarter of 2012, was 60,052 BOE/d, up 7% from the prior quarter continuing production levels, driven by an 8% sequential increase in tertiary production and a 6% sequential increase in non-tertiary production. Fourth quarter of 2012 tertiary production was 21% higher than the year ago quarter primarily due to strong contributions from the Company's newest CO[2] floods at Hastings and Oyster Bayou fields and the expansion of existing CO[2] floods at Delhi and Tinsley fields.  The sequential increase in non-tertiary production during the fourth quarter of 2012 was primarily the result of properties acquired from ExxonMobil during such quarter, which contributed approximately 1,200 BOE/d to quarterly production. Denbury estimates current average net production from the properties to be acquired in the pending CCA Acquisition at approximately 11,000 BOE/d, of which 99% is oil and natural gas liquids. Assuming the acquisition closes as currently scheduled near the end of the first quarter of 2013, Denbury estimates the properties would contribute approximately 7,700 BOE/d to its full-year 2013 average daily production. Preliminary 2012 Capital Expenditures Denbury estimates that 2012 capital expenditures, excluding expenditures on acquisitions, capitalized interest, and tertiary startup costs, were approximately $1.45 billion, which was in-line with the budgeted amount.  Of this amount, approximately $1.1 billion was spent on oil and natural gas development and exploration activities, with the remainder primarily spent on CO[2] sources and infrastructure. Capital expenditures on properties Denbury sold in 2012 were approximately $0.4 billion.